Exclusive: CBN approves Naira payout for diaspora remittance

Nigeria’s Central Bank has now approved Naira payouts for diaspora remittance, ending a ban that had been in place since December 2020

In a circular dated July 10, 2023, Nigeria’s Central Bank approved the payment of the Naira to beneficiaries of diaspora remittance. The circular means that banks and International Money Transfer Operators (IMTOs) can now pay their recipients in Naira, ending a three-year ban. Part of the CBN’s circular said, “The Central Bank of Nigeria hereby announces Naira as a payout option for receipts of proceeds of International Money Transfers.”

In December 2020, the CBN banned banks and IMTOs from paying recipients in Naira. The policy also stated that only banks could transfer funds onward to recipients. In theory, the CBN policy ended the business model of many digital remittance companies that allowed Nigerians abroad to send money directly to the Naira accounts of recipients.

Months after the “Naira payment ban,” the CBN introduced the Naira for Dollar Scheme in March 2021. These policies were part of Godwin Emefiele’s attempts to encourage diaspora remittances to move through formal channels and boost FX liquidity. The bank hoped to squeeze unlicensed IMTOs out of business by insisting on paying recipients foreign currency. But given the popularity of digital remittance apps, which allow customers to receive money in Naira, it is doubtful that these policies succeeded.

This recent policy removal is another step towards loosening the strict control the CBN has exercised over FX rates in the last five years. It’s also great for customers who can now choose between receiving their funds in foreign currency, eNaira and the Naira. Customers who choose to receive their funds in Naira will be paid using the Investors & Exporters Window rate on the day of the transaction.

The CBN’s circular also updated the list of registered IMTOs in Nigeria. In February 2021, the CBN listed 47 approved IMTOs, but this week’s circular expanded the list to 62 companies. Some newly approved IMTOs include Comet Trading, CSL Pay Limited, Direkt Wire UK Limited, Fiem Group LLC DBA Ping Express, Lycamoney financial services limited, and SimbaPay Limited.